diminished.
As Sir F. Lugard
5. The Governor points out in para. 7 of his despatch that the Germans, as part of their policy of establishing a sphere of influence in Kiao Chau, started a High School, heavily subsidized from Imperial funds, which was looked upon as a dangerous rival to the Hong Kong University. If, therefore, one of these institutions is ignored by the Government of the Country in which it is situated, while the other is in every possible way encouraged, there can be little doubt that the Chinese will regard the latter with more respect; and that Kiao Chau instead of Hong Kong will be the headquarters of Western education in China.
It is, of course, true that the interests of German traders will be advanced, and the prestige of the German Empire enhanced at the expense of the commercial and other interests of Great Britain.
6. The revenues of Hong Kong are, unfortunately, not at present in a position to permit the University making a contribution to the